The problem in my opinion is that this deal doesn't really validate Brilacidin unless the upfront payment has some weight.
1) $1M upfront payment
$1M upfront + $1M start phase 3 + $1M NDA filing
-AS pays us $3M to get to an NDA filing.
-AS pays the trial cost in exchange for 90%+ profits on a phase 3 drug.
-IPIX was willing to sell a phase 3 ready indication for $1M and $6M in regulatory milestones and a 6% royalty.
This doesn't improve our cash condition, bargaining power in other deals, AS puts basically no skin in the game other than the trial cost, etc. This deal would be so bad our stock price would go down. If that November 10Q shows ~$1M I anticipate the stock will drop below $0.10 absent another deal before then. It would also require another bridge financing deal likely at worse terms than we have now.
Do we even recoup our B-UP trial costs with this kind of payment structure prior to royalties? I can't believe that IPIX would do a deal like this and give away 90%+ of a phase 3 ready drug at a loss. It just makes no sense unless it was this or close up shop.
2) $10M-$15M upfront payment
Now AS is at least paying something to get in the game. This greatly improves our cash position and bargaining power as this cash combined with some stock sales would allow us to head into a B-OM phase 3 or Kevetrin Oral Phase 2 on our own. We need there to be some credible belief that we could go it alone on these otherwise we're going to sell more indications for pennies on the dollar.
We are dealing with a phase 3 asset projected to earn $100M/year. If I said we were getting $15M + $6M in regulatory milestones + 6% royalty with up to $18M in sales milestones I would have been laughed off the board by everyone except Scott.
It's not a stretch at all to expect that we received $10M, $15M, or even $20M upfront for this asset given the anemic milestones and royalty. Even if it only makes $40M/year (What is that? A few thousand patients a year?), AS would recoup their costs including the trial within two years and make $400M in profit over the next 10.
As you say, time will tell. I'm optimistic that we have a hefty upfront and this deal wasn't the disaster that the market believes it is.
